Investment real estate: what it is and how it works

Westpac's guide to property investment types sets out some general advantages and considerations for houses, apartments, townhouses, house and land packages, and land. It also explains Torrens, strata and company titles. The guide notes that each state and territory tends to have its own system for property types and land titles.

The guide groups property into types: house, apartment, townhouse, house and land package, land, and other options such as Defence Housing, NDIS housing and commercial investment properties. For each type, it lists points to weigh rather than a single recommendation.

Before making an offer, Westpac's guide suggests checking the address with a lender. It notes that Westpac may decline very small units, and some company titles, suburbs and apartment blocks.

For a house, Westpac's guide lists owning the land as a general advantage, along with the chance to subdivide or add a granny flat. It also notes more expensive purchase, lower urban supply, maintenance costs, no strata help, and possible higher insurance and land tax.

For an apartment, the guide points to a lower entry point, lower council rates, and strata arranging maintenance. It notes that strata fees can be significant and vary, and that capital growth may be slower and more suited to an income stream.

For a townhouse, the guide says it usually sits in a row of more than three houses that share at least one wall, depending on the state or territory. It can be a middle ground between a house and a unit, with shared land ownership and sometimes strata titles and body corporate fees.

Westpac's guide says land can be bought now and built on later, with no rental income until a property is built. It notes extra costs can include public liability insurance, land tax and fencing, depending on the state or territory, and that Westpac may not lend against certain "speculative investment" parcels of land.

The guide also covers house and land packages, where the build is in warranty. It lists completion delays and research into the builder and build quality as considerations.

The realestate.com.au investing section lists guides on finance for an investment property, apartment versus house, and spotting an investment hotspot.

Westpac's guide explains that a Torrens title usually applies to land and houses, and it names the owner or co-owners of the land and property. A strata title usually applies to buildings with shared areas, such as units and townhouses.

Under a strata title, an owners' corporation holds shared ownership, names each person as a shared owner of the building and its land, and charges strata levies. The guide says an individual owner has ownership of their own dwelling.

The guide adds that with a company title, a person who holds shares in the company can occupy a particular dwelling. It suggests checking with a lender whether shares will be enough security for a loan.